Tribunal rectifies mistake in cash seizure order, emphasizes link between funds source and seized cash

The Tribunal allowed the Miscellaneous Application seeking rectification of a mistake in its order regarding cash found and seized from the assessee. It acknowledged that the cash belonged to the company and was sourced from bank withdrawals and business operations. The Tribunal emphasized the need to establish a clear link between the source of funds and the cash found during the search. The order was modified to remand the issue back to the Assessing Officer for re-verification, stating that if the assessee could demonstrate sufficient bank withdrawals to explain the funds found, no addition should be made under section 69 of the Income Tax Act.

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Issues involved:
Rectification of alleged mistake in the order of Tribunal dated 11.01.2019 in ITA no.1256/Hyd./2012 regarding cash found and seized from the assessee.

Analysis:

1. The assessee filed a Miscellaneous Application seeking rectification of a mistake in the Tribunal's order regarding the cash found and seized. The cash amount in question was Rs. 4,00,62,250, with Rs. 3 crores found with individuals at the airport and the remaining amount at the appellant company's premises. The authorities had issues with the link between the cash withdrawn from the bank and the cash found during the search. The appellant argued that most of the amount was withdrawn from the bank, supported by bank statements and cash book entries. The Tribunal was urged to reconsider the evidence and remit the issue back to the AO for fresh examination.

2. The Tribunal acknowledged the appellant's argument that the cash found belonged to the company and was sourced from bank withdrawals and business operations. The Tribunal noted that if the withdrawn bank amount and business cash were sufficient to explain the cash found during the search, no addition under section 69 of the Income Tax Act could be made. The Tribunal agreed that the failure to establish a live link between the cash withdrawals and the cash found was a mistake that could be rectified under section 254(2) of the Act.

3. Consequently, the Tribunal modified the order by remanding the issue back to the AO for re-verification. The Tribunal substituted certain lines in the original order to reflect that if the assessee could demonstrate sufficient bank withdrawals to account for the funds found, no addition should be made. The Miscellaneous Application filed by the assessee seeking rectification was allowed, emphasizing the importance of establishing a clear link between the source of funds and the cash found during a search.

This detailed analysis highlights the key arguments, findings, and the Tribunal's decision regarding the rectification of a mistake in the order related to cash found and seized from the assessee.

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